Before you set up a business in Germany, you must complete a number of formalities. These also depend on whether you want to work on a self-employed (gewerblich) or freelance (freiberuflich) basis. Freelancers must register with the tax office (Finanzamt). If you want to register as a self-employed entrepreneur, first contact the local trade office (Gewerbeamt). The Authority Finder will guide you towards the authorities you will need to deal with and will tell you where you can find them in your area.
Dealing with various authorities might cause difficulties. Nevertheless, you should try and make use of their support. That is the reason why you should be well prepared to receive help in the most efficient way. Complete the formalities in good time. Most importantly, do not be scared off by the bureaucracy and inform yourself of mandatory registrations and approvals in advance!
2. Pay taxes
When you set up a business in Germany, you must also pay taxes to the tax office, i.e. the local authority of Germany’s fiscal administration. The type of taxes you will need to pay depends i. a. on your company’s size and legal structure as well as the amount of revenue.
In addition, an annual tax return for your business, in which you disclose all earnings and the turnover, must be submitted to you tax office.
Seek advice from a tax advisor to avoid making mistakes and possibly incurring tax debt. The tax office will also help clarify any tax-related questions.
3. Insure yourself and your company
Being self-employed also means that you need to take care of many things. This includes you and your company being ready for all eventualities – for example, in the event of illness or unemployment. Incidents such as theft, burst water pipes and fire damage are rare, but can quickly jeopardise the existence of a new company.
4. Inform yourself of the contracts and laws that affect you
As an entrepreneur in Germany, you are bound to have to deal with numerous contracts, laws and legal regulations (e.g. lease agreements for your office space, product liability, etc.). The big advantage is that if all business transactions are contractually defined, you are guaranteed a high degree of legal certainty.
You can find an overview of all the important laws and contracts that affect you as an entrepreneur on the start-up portal. Additional information will be provided by the Chambers of Industry and Commerce (IHK). If you need additional support, please consult a lawyer.
5. Fulfil your duties as an employer
If you would like to employ your own staff in your company, you must respect a number of rules and obligations. In order to be allowed to hire staff in the first place, you will need a company registration number. On the start-up portal, you can find out how to obtain this number and which steps still need to be taken afterwards. Remember that as an employer in Germany, you are obliged to pay taxes and social security contributions every time you pay wages.
Of course, you will also need to respect a number of legal regulations in regard to your employees. For example, you must continue paying your employees' salaries and wages even if they fall ill; in addition, your employees have a right to annual leave. It is also important to note that employees cannot be made redundant without a valid reason. Make sure to be well informed of your obligationsregarding your staff.
The private liability insurance is an indemnity insurance which you can take out voluntarily with various insurance providers. In case of damage, the insurance company covers the costs incurred up to an insured sum you previously agreed on.